EVERETT — Snohomish County Executive Aaron Reardon wants the County Council to increase the limit on loan guarantees on behalf of agencies that provide low-income housing.
The county currently guarantees up to $40 million in loans for affordable housing, according to Reardon’s staff. That credit enhancement is available to Housing Hope, the Everett Housing Authority and other organizations that help low-income families find a place to live. Reardon asked the council this week to increase that amount to $100 million. If the council agrees, local housing agencies would be able to secure lower interest rates on financing for new projects.
“This is a way for the county to partner with our community stakeholders and to increase their buying power at no cost to taxpayers,” Reardon said in a prepared statement last week.
The increase could mean millions of dollars in savings that would be passed on to people who most need a break in housing costs, said Ed Petersen, director of Housing Hope.
“This is more significant than just what we’re doing today,” he said. “This is all about creating a 10-year affordable housing production pipeline that continues to make a dent in the need for affordable housing.”
It’s not clear when the County Council will consider the proposal.
“I don’t think there’s anyone on the council who wouldn’t like to find a way to do more for affordable housing,” Council chairman Mike Cooper said. “But we have to carefully analyze the risk before we make our decision.”
It may not be prudent to increase the loan guarantee cap during such tumultuous economic times, said Councilman Brian Sullivan, chairman of the council’s finance committee.
County government is facing a revenue shortfall that could reach $21 million or more this year. Every county department has trimmed nearly 9 percent from their budgets, and more than 100 people have been laid off. The council in November adopted a 2009 budget that will be balanced only if county leaders can find more ways to trim costs. Council members have warned that there could be more layoffs in the coming months.
“It doesn’t take a rocket scientist to figure out that we are in a world of hurt,” Sullivan said.
If there’s a $60 million increase on loan guarantees, the county may not be able to take over a loan if a housing agency falls behind on payments, he said.
The proposal to increase the loan guarantee cap was first made last year, as part of “Housing Within Reach,” an affordable-housing plan released by the Housing Consortium of Everett and Snohomish County. The increase is one proposal made in the plan that doesn’t cost county government anything, consortium director June Robinson said.
“The beauty of this credit enhancement is that it doesn’t require actual money,” she said.
Other recommendations from the plan include setting up a revolving fund so local housing agencies would have the flexibility to purchase property when it comes available, instead of passing it up for want of immediate funding. Such ideas aren’t likely in the current economic climate, Robinson said. Widespread financial instability also makes it difficult for small agencies to get loans. That could change if the county offers credit enhancement through loan guarantees, she said.
Reporter Krista J. Kapralos: 425-339-3422 or kkapralos@heraldnet.com.
Talk to us
> Give us your news tips.
> Send us a letter to the editor.
> More Herald contact information.
